Short Sale - A sale of a "house in which the proceeds fall short of what the owner owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the remaining deficiency. In some cases, the lender may require the seller to pay a cash contribution or take on a note for a portion or all of the deficiency balance. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner may be able to pay off the loan for less than what he owes."

Common Short Sale Questions?

1. Will the bank pursue a deficiency? This is definitely the number one question. There are many government programs that allow for a waiving of the deficiency, like HAFA and FHA short sales; however, many short sales will not fall into these categories and this issue will be dealt with on a deal per deal basis. I have seen lenders waive the deficiency for many of my clients. Your agent needs to know when and how to ask for this. Sometimes lenders may require a promissory note or cash contribution in exchange for a full release of deficiency. The full release of the deficiency is always my primary goal for my clients.

2. What are the tax ramifications of pursuing a short sale? I advise all of my clients to consult with an accountant regarding taxes and short sales. Currently, if the property is your primary residence, you can avoid the tax liability. Also, your accountant can run an insolvency test to see if you can avoid taxes on the deficiency based on insolvency. Understand, the IRS considers forgiveness of debt as income. It is very important that you check with your accountant to verify that the short sale will not create a huge tax bill. Expect your lender to send you a 1099 for the forgiveness of debt.

3. Will my credit be affected? The answer to this question is yes. Your credit will be affected if there are late payments and when the short sale transaction takes place. However, a short sale may be better for your credit than a foreclosure and after you complete the short sale, you can begin to repair your credit.

4. Can I do a short sale if I do not have a real hardship? Yes, this is very possible. I have completed short sales for clients that were economically healthy. The bank may require more in terms of a cash contribution but this will be different with every situation. I am happy to take short sale listings from financially sound clients.

5. Can I stay in my house while working on a short sale? Absolutely! On the HAFA Government short sale program it is required that you stay in your home during the process. Staying in the home is encouraged by all.

6. Why do short sales take so long to complete? Do not let the name fool you. Short Sales are not short in time. If you understand the dynamics of Destin and 30a Short Sales, you will understand why they take time. In a short sale, the sale is contingent upon lender approval. In the beginning the seller must provide a lot of information to the lender. This process can take up to 3 weeks to complete with the lender. After that, the lender has to order an appraisal and that can take another few weeks to be processed and reviewed. After the valuation process is complete, the bank will begin negotiations on price, deficiency language for the seller, and terms. This process can take weeks depending on how many times the lender, buyer, and seller negotiate. Also, lenders some times get backed up and a file may sit for a few weeks. This is why persistence, patience and constant follow up are required.

The document below explains the benefits of a Short Sale versus a Foreclosure.

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Call me today if you are considering a short sale on your property. I am an experienced short sale agent and I work very hard for my clients. Feel free to call or email me any time and I will be happy to explain things in greater detail. I have been involved in well over 30 short sale transactions and really enjoy helping people move forward.

“Clayton, I'm writing to sincerely thank you for all your support and hard work through our extremely successful short sale.

When we contacted you, we were not very familiar with the short sale process and were uncertain if a short sale was even possible for us. You explained the process to us in detail, clearly outlining our options, risks and potential benefits. We particularly appreciate your patience, honesty and willingness to spend time helping us through that education process, never pressuring us in the least.

Once we made the decision to list our property with Mainsail, you continued to guide us through the process step by step. The service we received from you and your team at Mainsail could not have been better. It was prompt, professional and extremely well informed. Your systems allowed us to easily process everything remotely.

You always remained positive, even during those unexpected set backs. I'm still amazed that you got that late stage surprise issue resolved in time to hit our closing date. Your persistent yet delicate interactions with the lender may very well have been the key to our success.

I don't know if you ever get requests for references, but if so please consider having them contact me. We feel so fortunate to have found you and your team at Mainsail to help us sale our property.

"Mainsail Realty Company/Clayton Bonjean is not associated with the government, and our service is not approved by the government or your lender." "Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit"